Lei Jun Xiaomi

Lei Jun sold smartphones at 5% profit margins when every competitor targeted 20 to 30%. In 2011, Xiaomi launched its first phone at half the price of a comparable Samsung, and sold 300,000 units in the first day. Within three years, Xiaomi became the third largest smartphone maker in the world. The margin sacrifice was intentional. Lei Jun publicly promised investors that Xiaomi's hardware profit margin would never exceed 5%. The phone was the distribution channel, not the product. Once a customer owned a Xiaomi phone, they entered an ecosystem of apps, cloud storage, smart home devices, and financial services. Revenue per user from services averaged $32 annually against a customer acquisition cost of near zero.